JONATHAN DEBASC: The key role of partnerships in the energy transition

As the World Economic Forum (WEF) took place in Davos last week around the theme “Co-operation in a fragmented world”, SA continued to search for solutions to its ongoing energy crisis and carbon-neutral ambitions. This lays bare the premise that business as usual will not enable us to alleviate the pressure on the grid — we need to approach things with a collaborative mindset through partnerships in both the private and public sectors.

Leaders across industries and sectors understand the need to move away from a fossil fuel-based energy system and accelerate the transition towards a low-carbon economy. The mining industry has an important role to play in this transition.

Mining remains one of SA’s most critical sectors, helping to drive economic growth and job creation. It has historically been a significant contributor to the country’s GDP, export earnings and employment, directly employing nearly half a million people. It is also an essential source of foreign direct investment, with investments valued at around R46.5bn pledged towards mining and mineral beneficiation at the fourth SA Investment Conference in mid-2022.

However, it is also one of the most intensive energy consumers and hard-to-abate industries — using about 30% of SA’s annual energy supply and accounting for substantial carbon emissions. Security of electricity supply is essential in the mining industry as it not only affects production, but also the safety of individuals in the mining operation. Ensuring the health, safety and security of people and the environment is not only enshrined in SA legislation, it is also inherent in every operation’s code of conduct, as concerns around safety will halt production to prevent incidents.

However, the unintended consequence is a knock-on effect for the mine’s output, which in turn affects the broader economy. Increasing periods of energy disruption and load curtailment in recent months have heightened safety concerns as this affects the ability to operate safely and securely. 

How renewable solutions and partnerships are proving they have the power to drive decarbonisation

To mitigate against this, mines across SA have had to explore alternative solutions to ensure a more sustainable and carbon-neutral energy supply. Renewables are proving that they have the power to overcome supply challenges, advance sustainable development, drive progress towards decarbonisation and facilitate a just transition.

Already showing where renewables and partnership can make a difference is Anglo American’s hydrogen fuel cell battery hybrid truck. The world’s largest hydrogen-powered mine haul truck, it’s the first time globally that a truck of this size and load capacity — at 300 metric tons — has been converted to run on hydrogen.

The truck provides a fully integrated hydrogen system consisting of production, fuelling and haulage, with renewable hydrogen to be produced by Engie at the company’s Mogalakwena mine in Limpopo. The hydrogen plant, which will produce the renewable hydrogen used by the truck, is being developed, built, financed, and operated by Anglo American partner Engie, the largest independent and integrated energy producer in SA.

How partnerships are the key to unlocking the value of renewables at scale

This is just one example and is part of a growing body of evidence highlighting the potential of partnerships between industry players in the private and public sectors. Partnerships are the key to enabling and unlocking value at scale. Effective partnerships can take different forms, ranging from traditional power purchase agreements to joint ventures. 

Successful partnerships require an enabling macro environment where conditions are optimised to encourage and accelerate investment. SA’s government has introduced measures to show that it is creating this environment.

The energy action plan announced by President Cyril Ramaphosa last year was introduced to diversify energy supply and generation and increase private investment in generation capacity. This includes lifting the 100MW licensing threshold and removing regulatory red tape for solar projects in areas of low and medium environmental sensitivity.

Industry players need to choose the right long-term partner, while carefully considering the type of partnerships that will yield the best value for decarbonising the mining sector and driving a just transition. Pursuing this goal requires stakeholders across the public and private sectors alike to partner and take collective action. That is one of the ways SA can truly transition to a low-carbon, sustainable and inclusive future.

• Debasc is MD of green hydrogen & thermal business in Africa at Engie.